HRM vs. HCM: A complete guide



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Using HRM and HCM can be favorable for a company in several aspects due to the many benefits they offer. However, company owners can confuse these two concepts frequently because these elements take care of similar functions within a business. Therefore, it is important to know about the differences between these concepts in order to apply the most convenient strategies.

In this article, you will learn everything you need to know about HRM and HCM, including their differences and similarities. In addition, we will explain the circumstances in which your company needs each of these elements to improve its processes. And, of course, you will find useful information about all the benefits that your company can get by using them. Let us observe:

  1. What is HRM?
  2. What is HCM?
  3. Why is Human Capital Management important for your company?
  4. How many similarities can you find between HRM and HCM functions?
  5. What are the differences between these HRM and HCM functions?
  6. How can you choose between HRM and HCM to overcome challenges?
  7. Can you boost your HR department’s functions by outsourcing them?
  8. How can Connect Resources help you get HRM and HCM solutions for your business?

1. What is HRM?

Human Resource Management, which is also known as HRM, is a function that involves several processes related to staff management. More precisely, it is about hiring new employees who suit your company’s requirements, as well as managing them. This way, it is possible to attain maximum productivity from these workers while carrying out a number of features of the HR department.

As for those features, the HRM software usually involves several of them that are related to your company’s HR department. For example, payroll management, employee attendance and timings, talent management, recruitment processes, and benefits administration are some of those features. An HRM system that provides the best solutions will encompass these elements that mainly focus on the company’s payroll functions.

In other words, if your company counts on efficient HRM software, it will facilitate workflow automation and streamlining too. Besides, having this type of software can also help you reduce administrative burdens effectively and enable full compliance with regulations. As a result, an HRM system will enhance productivity within your company, as well as boost profitability and efficiency permanently.

Nonetheless, it is essential to know how to differentiate and use HRM and HCM since these are two different concepts. And below, you will be able to find information about the HCM functions and their benefits.

2. What is HCM?

Besides Human Resource Management, you can also opt for using another option, which is Human Capital Management or HCM. But you should know that there are similitudes and differences between HRM and HCM, so you must learn about each concept separately. Therefore, let’s now take a look at the definition of Human Capital Management and how it works in a company.

When we talk about HCM, we refer to a broader concept in contrast with HRM since it involves other elements. In fact, HCM consists of the HRM features, however, it focuses on methods and strategies to optimize or increase productivity. Plus, it also focuses on methods to achieve long-term returns on Human Resource investment and involves strategies to manage human capital.

In a company, the HCM software requires data from the HRM system in order to streamline it for company owners. And also, it assists company owners with decision-making through a reliable source, allowing them to overcome several HR challenges. For example, the HCM can help them meet challenges like team-based work structures, contract-based employees, workforce demographics evolution, and employee performances.

And how does it work? As you may know now, HCM involves several processes related to Human Resources and employees. For example, it goes from the end-to-end business process of hiring to retiring or firing (including hiring processes, onboarding, training, etc.). An efficient HCM system can automate these processes, as well as help to track organization charts and report hierarchies.

3. Why is Human Capital Management important for your company?

Besides helping you with different HR functions, HRM and HCM are essential elements that you should use due to many reasons. As a matter of fact, both of these factors are now critical functions for any company because of their benefits. However, HCM is particularly a more important system that you must implement in your company in order to increase productivity.

Therefore, let’s take a look at the advantages of using HCM software in a business:

  • It brings out the best in your employees and boosts their efficiency exponentially.
  • This software allows you to accurately hire the best candidates for available roles.
  • HCM can also ensure a smooth, two-way information flow between employees and managers.
  • It can also help you develop effective training courses to upgrade your employees’ skills and capabilities.
  • HCM software facilitates appraising of employees and giving them feedback to boost the company’s growth.

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    4. How many similarities can you find between HRM and HCM functions?

    HRM and HCM can be similar in many aspects and they indeed share several similarities. For example, they both use modern automation tools and software in order to streamline data for business owners. Nonetheless, some procedures may be partially or fully automated, including payroll management, timekeeping of employees, and other operations.

    Some other similarities that these systems share can be the following:

    • HRM and HCM can provide your employees with the ease of self-service. For instance, they can check in and check out on their own. Also, they can apply for leaves, manage their benefits, and perform other tasks. And since they will not need to interact with the HR department, the company will save time and money during the processing.
    • Both systems use AI (Artificial Intelligence). For example, they use AI where chatbots and other tools make the information more error-free.

    5. What are the differences between these HRM and HCM functions?

    On one hand, HRM can provide the core HR needs and requirements for small and also mid-sized companies. And it is usually limited to day-to-day employee activities, tasks, and monitoring administration.

    On the other hand, HCM can provide a broader range of data and information related to your employees. And that includes your employees’ performance cycles, as well as advanced employee analysis.

    Furthermore, HCM is also known for allowing companies to forecast their payroll requirements. Additionally, it helps them create effective strategies that aim to increase the return on Human Resources investments. As you can see, HRM and HCM can be favorable for your business, as long as you use them correctly.

    6. How can you choose between HRM and HCM to overcome challenges?

    For some companies, it can be difficult to choose between HRM and HCM in most cases due to several reasons. For example, it could be hard due to the similar occasions in which it is necessary to use these systems. Therefore, it is necessary to be aware of the differences between them.

    But besides knowing the basics of HRM and HCM, you will also need to follow certain tips and recommendations. This way, you will be able to know how to choose the most suitable option to fulfill your company’s needs. Make sure to follow these tips:

    • Identify your company’s problems and challenges.
    • Explore the solutions available for each problem.
    • Determine your company’s requirements and needs.
    • Make sure to validate the selection.

    6.1. Identify your company’s problems and challenges

    In case your company already has an HR system but it is outdated, there could be more problems. And, as a result, the process can become more complex, as well as less effective. Furthermore, there will be no compliance with the information that you require. And among other issues related to outdated HR software, you can find higher costs of ownership as well.

    6.2. Explore the solutions available for each problem

    In the market, you will be able to discover a variety of solutions and legal services related to HRM and HCM. And most of them have similar features that will make it difficult to choose which one is the most suitable. However, you will also find outstanding options that offer actionable data, scalable technology, personalized employee experiences, global outreach, and more.

    6.3. Determine your company’s requirements and needs

    It is a fact that every single company has different requirements and needs when it comes to Human Resources functions. Nonetheless, all companies share the same goal, which is increasing efficiency and profitability, as well as ensuring security, and more. Your company may have other needs, like completing recruitment procedures, attracting candidates, and many others that you can fulfill with HRM and HCM.

    6.4. Make sure to validate the selection

    Lastly, you will also need to do one more thing when considering which HR system best fits your company. In short, it will be necessary to gather and list down all the HCM requirements. Then, you will need to measure these requirements against your services provider’s capabilities. By doing this, it will be easier for you to choose the most suitable software for your business.

    7. Can you boost your HR department’s functions by outsourcing them?

    Certainly, using HR outsourcing services will allow you to boost the many functions and operations of your Human Resources department. By using these services in the UAE, you have to transfer your HR functions to a third party, which is usually a specialized agency. You can decide whether to transfer a single function or several ones, depending on your company’s needs and requirements.

    And besides getting these services, you can also opt for requesting payroll services in the UAE to transfer payroll functions. As you may know, payroll involves a variety of elements that your company must cover, such as salaries, bonuses, etc. Other elements that this function involves are gross wages, incentives, allowances, overtime pay, deductions, net pay, and many other ones.

    If you still have not decided whether to use HRM or HCM, try requesting any of these UAE legal services. And this way, you will not have to worry about these HR functions. In fact, the experts will take care of these operations while you focus on your company’s core functions.

    8. How can Connect Resources help you get HRM and HCM solutions for your business?

    Improving all your HR functions and processes is possible with Connect Resources as your ally in the United Arab Emirates. With PRO services and other HR-related solutions, your company will be able to satisfactorily reach success in no time. And our Connect Resources team is specialized in providing a variety of HR services to achieve your goals in Dubai.

    On the other hand, besides the UAE, you can also these excellent services in other countries in the Middle East. This way, you can improve your company’s functions regardless of your location and also expand your business across the region. Make sure to contact our team in order to receive more information as well as our services for HR functions.

    You should also find out more about our HR consultancy services.

    Do you want to get more information about this topic? Contact Connect Resources and you will find more facts about HRM and HCM. You can call us at +971 43 316 688 and your call will be forwarded to one of our agents. Another contact alternative that you can use is sending us an email at to receive more detailed information.

    Are you a professional looking for convenient job offers in the United Arab Emirates? By visiting, you can find the best solutions and job opportunities in the country. All you will need to do is submit your CV, so you can start your search and get satisfying results. Send an email at if you want your application to be reviewed by our specialists.

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